A fraudulent investment involving the payment of purported returns to existing investors from funds contributed by new investors.
A Ponzi scheme is a financial fraud under the pretext of an investment opportunity with high returns. The name dates back to the 1920s financial fraudster, Charles Ponzi, who swindled investors out of millions with a fraudulent investment opportunity.
In a Ponzi scheme, early investors are paid with the investments of later investors to keep the scheme going. However, the money is never invested in the promised way, and the system relies on a constant stream of new investors to keep the charade going. Before a Ponzi scheme collapses, some warning signs become visible, like slower processing of withdrawals and missing funds.
Some cryptocurrency Ponzi schemes can be easily identified. Others are more difficult to uncover. There are a few telltale signs investors should look out for:
Join the thousands already learning crypto!